TaxTMI 
TaxTMI 
2016 (7) TMI 445
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....Income - tax (Transfer Pricing) - IV ('Transfer Pricing Officer' or 'TPO') and thereby erred in not appreciating that the Appellant had prepared the TP documentation bona fide and in good faith and conducted the comparable analysis based on the detailed Functional Asset and Risk analysis performed with due diligence and the data available at the time of conducting the comparability analysis. 3. That the learned AO and the learned Panel erred in ignoring the limited risk nature of the services provided by the Appellant as detailed in the TP documentation and in upholding the conclusion of the learned TPO that no adjustment on account of risk differential is required while determining the Arm's Length Price of the international transactions of the Appellant. 4. That the learned AO and the learned Panel erred both in facts and law in confirming the action of the learned TPO of making an adjustment to the transfer price of the Appellant by Rs. 1,03,97,210 holding that the international transactions do not satisfy the arm's length principle envisaged under the Act and in doing so grossly erred in: 4.1. Upholding the act of the learned T....
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....ting internet access charges as 'expenditure attributable to the delivery of software outside India. under Explanation 2(iv) to section 10A of the Act. 8. That the learned AO erred while computing deduction under section 10A of the Act in treating expenditure in foreign currency as 'expenses incurred in foreign exchange in providing technical services outside India' under Explanation 2(iv) to section 10A of the Act. 9. That the learned AO erred while computing deduction under section 10A of the Act in reducing the internet access charges of Rs. 25,47,030/- and expenditure in foreign currency of Rs. 4,14,863/- from the export turnover. 10. That the learned AO erred in not applying the principles of section 80HHE to section 10A. Consequently, the learned AO erred in not relying on the various judicial decisions on the said matter. 11. Without prejudice to the above, that the learned AO erred in not allowing the reduction of internet access charges of Rs. 25,47,030/- and expenditure in foreign currency of Rs. 4,14,863/- from the total turnover in computing deduction under section 10A of the Act. 12. That the learned AO erred in ....
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....AR of the assessee that ground no.1,2,3,4.1,4.2 & 4.4 are general. Regarding ground no.4.3 and the additional grounds, it was submitted by the ld. AR of the assessee that the assessee had considered 36 comparables in the transfer pricing study, whereas the TPO has decided the issue on the basis of 20 comparables out of which seven comparables are common. He submitted a chart of all the 20 comparables selected by the TPO regarding the assessee's objection in respect of some comparables. 4. Now, we discuss and decide each and every comparables on the basis of chart as under; 1. For M/s Aztec Software & Technology Services Ltd., it was submitted by the ld. AR of the assessee that this comparable should be rejected since RPT is in excess of 15% and it is in fact 17.78% in the present case. In this regard, our attention as drawn to page no.188 of the TPO's order where the TPO has noted down percentage of RPT over sales in respect of all the 20 comparables selected by him. 5. The ld. DR of the revenue had nothing to say on this aspect. It is by now a settled position of law that if the RPT is in excess of 15% then such company cannot be considered as comparable and....
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....tems Ltd., ld. AR's argument was the same that this company is dissimilar because it derives revenue from its software products and segmental information was not available. In support of his contention, reliance was placed on Tribunal's order rendered in the case of 3DPLM Software Solutions Ltd. in IT(TP)A No.1303(Bang)/2012 (AY: 2008-09) (copy available on pages 151-153) of the case laws compendium. As per the annual report of this company available on record it is seen is that this company is 100% export oriented unit (EOU) and it derived its income predominantly from export of software services and its products. It is also seen that the turnover is reported in a combined manner as sale of software services and products (export) of Rs. 209.17 Crores in the present year and segmental information is not available in the annual report. Under these facts, we find force in the submissions of the ld. AR of the assessee that this company cannot be considered as comparable for the reasons stated in the chart submitted by the ld. AR of the assessee that it derives its revenue from its software production and segmental information is not available. We hold that this company cannot ....
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....ilable at page 191 to 193 of case laws compendium). In this case, the Tribunal considered the comparability of this company i.e. M/s Accel Transmatics Ltd(Seg.) and it was held that respectfully following another Tribunal order rendered in the case of M/s Triology E-Business Software India Pvt. Ltd. V DCIT ITA No.1054/Bang/2012 or AY: 2007-08, this company cannot be considered as comparable. Respectfully following these two Tribunal orders, we hold that in the present case also, this company cannot be considered as comparable because of functional dissimilarity. 16. For seventeenth comparable M/s Synfosys Business Solutions Ltd., it was submitted by the ld. AR of the assessee that the assessee has no objection for selection of this company as a comparable. We hold accordingly. 17. For eighteenth comparable M/s Megasoft Ltd., it is the objection of the ld. AR of the assessee that this company should be excluded for this reason that RPT percentage is high. We find that as per the TPO's order available on page 389 of paper book, the percentage of RPT over sales is 17.08% and since it is more than 15%, we hold that this company cannot be considered as comparable because the R....